Although most people are familiar with Bitcoin and Ethereum, these two are not the only cryptocurrencies in circulation. Meme-based currencies have gained a massive following of late. Meme coins, as its name suggests, are a type of cryptocurrency inspired by memes, which are funny or humorous ideas captured in a photo, video, or other forms of media. Dogecoin and Shiba Inu are currently the most popular meme coins in the cryptocurrency world. These coins, though frequently made as a joke, have the potential to become mainstream. In 2021, for example, the value of Dogecoin skyrocketed manifold.
So, should meme coins be taken seriously?
Because many meme currencies have an infinite supply and their appeal is largely based on pop culture, they are extremely volatile and vulnerable to rapid price fluctuations.
The Doge meme, for example, was inspired by a viral photo of a Shiba Inu and led to the creation of Dogecoin. Although these cryptocurrencies aren't meant to be taken seriously, they can gain traction when members of the community buy into a coin to become a part of the joke.
How do meme coins become popular?
When a coin becomes popular and its value rises, ordinary investors may hop on board, further boosting its value. Famous internet figures and celebrities also help to enhance the popularity of various meme currencies. Tesla and SpaceX CEO Elon Musk is probably the most well-known example, and there's even a Dogecoin variant called Floki Inu named after Musk's pet dog.
Some meme coins are made solely to mock. Mongoose Coin was founded in December 2021 after a member of Congress coined the name during a discussion on digital currency.
Meme coins often have an infinite supply. Unlike Bitcoin, which was designed to have a limited number of units to mine, meme coins have billions of units in circulation.
How safe is it to invest in meme coins?
Because of its reliance on community sentiment and arbitrary outside influences, such as celebrity tweets, meme coin pricing is extremely volatile. While the value of a meme coin may skyrocket, as it did with Dogecoin, it may also plummet quickly if and when the community loses interest.
So, meme coins may not be the most reliable investment. Because of their enormous supply and volatility, they are inherently riskier investments.
What does the future hold for meme coins?
Meme coins skyrocketed in 2021, but they've mostly fallen in value since then. However, this does not imply that their fate has been decided. But they may never be able to achieve the same level of broad adoption as more cryptocurrencies like Bitcoin and Ethereum.